Charles Ridley v Dubai Islamic Bank PJSC
| Jurisdiction | England & Wales |
| Judge | Lionel Persey |
| Judgment Date | 22 July 2022 |
| Neutral Citation | [2022] EWHC 1912 (Comm) |
| Docket Number | Case No: CL-2018-000827 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 1912 (Comm)
Lionel Persey QC SITTING AS A JUDGE OF THE HIGH COURT
Case No: CL-2018-000827
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Jack Watson (instructed by LK Law LLP) for the Claimant
Robert Anderson QC and William Edwards (instructed by Baker & McKenzie LLP) for the Defendant
Hearing dates: 14–17 February 2022 and 21 February 2022
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on Friday 22 nd July 2022.
Lionel Persey QC (sitting as a Judge of the High Court):
Introduction
. In this action the Claimant (“ Mr Ridley”) seeks an injunction requiring the Defendant (“ the Bank”) to, in effect, take steps to procure his release from prison in Dubai. He is presently serving a sentence of 20 years, having already served a 10 year sentence in circumstances I shall describe below. Mr Ridley's case is that this 20 year sentence came about as the result of an impermissible request by the Bank made pursuant to Dubai Law No.37 of 2009 (“ Law 37”). The request is said to be impermissible because it was made in breach of a Restructuring Agreement (“ the RSA”) that had been concluded by Mr Ridley together with others and the Bank in 2007. The RSA is governed by English law and subject to an English jurisdiction clause.
Factual background
. The factual background is complex. I shall focus on the principal events that are relevant to the matters that I have to decide.
The fraud
. The matter starts with a fraud committed upon the Bank by Mr Ridley and others. This fraud is described by Hamblen J. and Flaux J. (as they both then were) in their judgments in related proceedings between the Bank as Claimant, and (1) PSI Energy Holding Company BSC, (2) Ryan Cornelius, (3) Mr Ridley, (4) Eren Nil and CCH Europe GMBH as Defendants. The judgments are reported at [2011] EWCH 2719 (Comm) and [2013] EWHC 3781 (Comm). Flaux J found in the latter case as follows:-
“… 11. From November 2002 onwards the Structured Finance Department of the Bank entered into a series of Agency Agreements with the fifth defendant and its associated company, CCH plc (referred to collectively as “CCH”) as the means by which short-term trade finance would be provided to exporters. It is not in accordance with Islamic principles for the Bank to provide trade finance by way of short-term interest bearing loans. Accordingly the model used was so-called murabaha agreements whereby the Bank itself (through CCH as its agent) would buy the goods from the exporter, then, again through CCH as its agent, would sell the goods to the purchaser. The difference between the purchase price and the sale price represented the Bank's profit on the transaction. The agency arrangements with CCH succeeded similar arrangements dating back to the 1980s under which the third defendant (who had long-standing business interests in the Gulf) and his then business partner, Guvan Nil, the fourth defendant's father, did murabaha deals with the Bank. After Mr Nil senior died in 2000, the fourth defendant became the third defendant's business partner and they did murabaha deals with the Bank through CCH, which they incorporated at around that time.
12. Under the Agency Agreements, once CCH had put the contractual arrangements in place, the Bank was to remit the funds required into an account in the name of CCH. The fact that funds flowed through CCH, rather than directly between the Bank and the exporter and purchaser respectively, enabled the fraud to be perpetrated. The third defendant admitted the fraud and his part in it at meetings with Mr Hugh Lyons and Mr Neil Dooley of the Bank's solicitors, Lovells (to whom I will refer as Hogan Lovells, the name by which they are now known), on 26 and 28 November 2007. He admitted that the fraud on the Bank had started in about 2003. It was very simple: the third defendant had arranged with the second defendant for one of the second defendant's companies to generate fictitious requests for trade finance for ostensible but in fact non-existent supply contracts which were submitted to CCH's office in Germany. False documentation in respect of the transaction would be drawn up by CCH in Germany and submitted to the Bank for financing. The third defendant said he and the fourth defendant had agreed to divide the proceeds of the fraud between themselves equally …
17. … That there was a fraud and that the second, third and fourth defendants actively participated in it, is irrefutable …”
. Both parties rightly accept that this judgment is binding on me.
The RSA
. The fraud was discovered by the Bank in 2007. Negotiations thereafter took place between the Bank and the relevant parties with a view to making a global settlement under which terms would be agreed for the repayment of the US$501 million outstanding and owing to the Bank. All parties were represented by English solicitors in those negotiations, Hogan Lovells for the Bank, SJ Berwin for Mr Ridley and Mr Cornelius, Clifford Chance for Mr Fitzwilliam and Plantation, Howes Percival for Mr Nil and Field Fisher Waterhouse for CCH plc. The negotiations, which included detailed discussions in the week of 13 August 2007 between the solicitors about the drafting of the RSA, culminated in its signature on 19 August 2007.
. The parties to the RSA were the Bank, CCH Europe, CCH International Plc (the Parent, the two CCH companies together being referred to as the Corporate Guarantors), Mr Ridley, Mr Cornelius, and Mr Nil (“the CCH Individual Guarantors”), Plantation and Mr Fitzwilliam. All parties to the RSA other than the Bank and Mr Fitzwilliam were referred to as “the Guarantors” under the RSA. I should at this stage mention that Plantation was a leasehold interest in Dubai over which the Bank took security as part of the RSA.
. Although it was signed on 19 August 2007, the RSA was subject to a number of conditions subsequent. These were eventually satisfied by the making of a Supplemental Agreement dated 2 October 2007. The RSA became effective on that date.
. The RSA lies at the heart of this hearing. I will deal with its terms later in this judgment.
Arrests and demands
. Between 21 May 2008 and 6 June 2008, Mr Cornelius, Mr Ridley and Mr Fitzwilliam were all arrested by the Dubai authorities: Mr Cornelius on 21 May 2008, Mr Ridley on 27 May 2008, and Mr Fitzwilliam on 6 June 2008.
. On 4 June 2008, barely a week after Mr Ridley was arrested, and despite the payments then due under the RSA having been made, the Bank served a notice of breach of the RSA on him. There then followed on 9 June 2008 a notice served on Plantation demanding repayment.
. On 12 June 2008, the Dubai Public Prosecutor placed an attachment on Plantation effectively freezing it from being sold. It appears however that this was removed in 2015.
. On 21 July 2008, the Bank served notices demanding repayment under the guarantee accelerating the time for payment under clause 18.4 such that the full amount of $440m was said to be due. On 28 July 2008 Al Tamimi and Associates on behalf of the Bank wrote to the parties to the RSA, referring to the notices of breach dated 9 June 2008 and demanding all sums due under the restructuring agreement immediately (amounting to c.$470m).
. On 4 November 2008, the Bank took possession of the Plantation land.
Law 37 of 2009
. Law 37 was issued on 27 December 2009 and took effect from that date. It is a Dubai, and not a UAE, law. It is common ground between the parties' experts on Dubai law that Law 37 was enacted as part of an anti-corruption campaign and was intended to (a) act as a deterrence against corrupt practices; and (b) facilitate the recovery of illegally obtained funds (and, in particular, “Public Funds”) by incentivising defendants to return them.
. Law 37 also lies at the heart of this hearing and was the subject of expert evidence of Dubai law. I will deal with the Law and the evidence about it below.
The 2010 Action (Hamblen J./Flaux J.)
. On 6 October 2010 the Bank brought the proceedings to which I have already referred above in the Commercial Court against Mr Ridley and others. It claimed that there were events of default under the RSA for which, inter alios, Mr Ridley as third defendant was jointly and severally liable to the Bank for the outstanding amounts due under the RSA.
. Hamblen J. held that the Bank was not entitled to summary judgment in October 2011, the second to fourth defendants having raised defences that had a realistic rather than fanciful prospect of success and which raised issues of fact that could only be resolved at trial. Flaux J. heard the trial and allowed the Bank's claims in December 2013.
Criminal proceedings in Dubai
. Mr Ridley and others were prosecuted in Dubai for their part in the fraud on the Bank. On 27 April 2011, the defendants, including Mr Ridley but with the exception of Mr Fitzwilliam, were convicted. The convicted defendants were each sentenced to 10 years' imprisonment, and subjected to a fine of AED 1.8 billion and to an order to pay the same amount pursuant to Article 230 of the Dubai Penal Code.
. There were then appeals to the Court of Appeal and then to the Court of Cassation. The Court of Cassation remitted the matter to the Court of Appeal, who after assigning experts to consider certain matters, amended the appealed judgment on 11 November 2014. I deal with these criminal proceedings in greater detail below.
The Plantation Action
. Plantation Holdings (FZ) LLC commenced an action against the Bank in the Commercial Court. It was heard in late...
To continue reading
Request your trial